Investigate the unethical business practice of Wal-Mart company

Wal-Mart is the largest retailer in the world nowadays and it was established by businessman Same Walton. The company's marketing slogan, "Always Low Prices", which is successfully attracted most of the shoppers to buy products at the stores. However, there's unethical business practice and unfair treatment to employees behind this accomplishment. This paper will estimate the behavior of the company while it's doing the business, discuss the problems that the company carries out, the influences from the issues of discrimination, environment, society, and economy, and suggest possible solutions.

Trace back to Sam Walton's historical line, he opened his first variety store after World War II and gained profit little by little. Later on, he got enough funds to open a chain of drugstore. His ambition turns him to cooperate with his brother in business. They expanded their business to more locations. According to PBS(Public Broadcasting Station), it reported that "by 1960, the Waltons' 15 stores were taking in $1.4 million a year". It led Walton brothers to step into a brighter future in their business planning.

When the brothers believed they achieved their goal successfully, other competitor came into the market. The competitor utilized the tactic of discounting goods in the store. They realized that they had to come up with a way to survive in the market, otherwise, their business would be driven out. Therefore, they established their first Wal-Mart store in 1962. Everything in store sold in low prices daily, it attracted most of the shoppers, and soon the chain of Wal-Mart stores sprang up across the United States. They're aggressive in expanding their business. Its "sales grew to $26 billion by 1989, compared to $1 billion in 1980."(www.pbs.org) They got this incredible profit within a year. Another reason that led Wal-Mart successful was that it increased employees' morale in the company. Employees felt they belonged to the company and had motivation to work harder.

The growth of Wal-Mart stores was rapid. By 1990, Wal-Mart became the largest U.S. retailer, with 1,700 stores. "One year later Wal-Mart entered the international market for the first time with the opening of a unit in Mexico City. Within five years, Wal-Mart would enter Puerto Rico, Argentina, Brazil and China. Since then, Wal-Mart has built stores in Canada, Germany, Korea and the United Kingdom."(www.pbs.org) It showed that the Waltons expanded Wal-Mart business to international countries successfully. And now on average, Wal-Mart launches a new megastore every two business days and each year it expands into one new country. Its sale increased up to $191 billion by 2000 and it becomes the leader of retailing market.

However, Wal-Mart gets critics heavily because of its unethical business practice and unjust treatment to its employees based on the facts. How do Wal-Mart keep its merchandises' prices as low as always? According to PBS, Wal-Mart has employed way more people than other company in the United States, thereby, the goods are supposed to be made in USA and it considered itself as a seller of U.S. manufactured goods. It seems like it's helping the U.S. economy. However, in fact, it used outsourcing way more than we can imagine.

The data shows that 70 percents of merchandise in Wal-Mart contains components made in China. It estimates it imports $15 billion of Chinese goods every year and concedes that the figure could be higher. It's because products that made with lower manufacturing cost will turn out as lower selling price of the products. By importing goods from other countries, Wal-Mart has forced many U.S. manufacturers out of business. Competitors in the same market has to lay off workers and close stores due to its predatory practices, some stores have to sell their merchandises at prices below the equilibrium point. As a result, Wal-Mart turns down the job entry level in the United States. Therefore, Wal-Mart dominates the retail market negatively.

Moreover, most of the goods are made in sweatshops, which means that the labor costs are very low, the employees works very hard for little money to raise their family. For instant, a sweatshop in China to produce handbags for Wal-Mart, an employee's average wage is from $0.13 to $0.23 and the worker has to work for 60-70 hours per week under bad working condition. The statement of Wal-Mart on sweatshop allegations says that "Wal-Mart strives to do business only with factories run legally and ethically. We continue to commit extensive resources to making the Wal-Mart system one of the very best. We require suppliers to ensure that every factory conforms to local workplace laws and that there is no illegal child labor or forced labor."(www.pbs.org) The statement got its use to protect the company's reputation and seems to be justice to others , however, the company does not regulate the factories well enough.

One of the news reported that "In 1991, labor inspectors found labels for Wal-Mart brands being made in Manhattan's Chinatown. There, 16 and 17 year-old Chinese immigrants without permits had been working for one month without being paid."(www.pbs.org) It shows that Wal-Mart's regulation was superficialized, it completely turns over the company's reputation, and there are still illegal workers get under-the-table pay in factories and have not get caught yet.

Wal-Mart has been knowing as big-box store, it brings convenient shopping to rural areas and small towns. However, it also has significant impacts on the environment. According to the study Shopping for Subsidies: How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth by Philip Mattera and Anna Purinton, the study addresses one of the Wal-Mart issues that "This contributes to the spread of suburban sprawl, which brings with it worsening traffic jams, storm-water and soil erosion problems, and deterioration of air quality."(p.12) These big box stores are often located in the area where people have to drive to get there without any other public transportation. It causes the environmental problem, such as air pollution due to huge traffic. Automobiles produce lots of carbon dioxide and increases the rate of health issues. "160million tons of pollution continued to spew into the nation's air each year up to 2004, and in 2002 some 146 million people lived in areas that did not meet the national air quality standard".(Business Ethic, p.215) The air pollution problem is keep growing widely because people are relying on using resource heavy and industries depleting natural resources nowadays, it directly damages the natural environment and our quality of lives.

Moreover, another study shows that "if air quality in urban areas were similar to the levels of rural regions with clean air, the death rates for asthma, bronchitis, and emphysema would drop by about 50 percent, and deaths from heart disease would drop by about 15 percent". (Business Ethic, p. 214) If Wal-Mart company be more conscience on environment condition, it helps improve the quality of air and reduce health issues by rates. In addition, government should rectify policies on companies and industries to an higher level.

Another fact shows Wal-Mart is being unethical to employees is that the treatment to employees in the company. "Wal-Mart workers earn on average 31percent less than workers in large retail as a whole, with wages of $9.70 per hour compared to the $14.01 average per hour earnings for large retail workers ".(The Hidden Cost, p.4) It shows that Wal-Mart's wages are significantly below retail industry standard. Moreover, for part-time employees in Wal-Mart, they are forced to work under 28 hours per week and they are not eligible for any benefit, such as no promotion from working as part-time to be a full-time employee. As Wal-Mart offers more part-time jobs, they will do less to stimulate the economy.

It leads to another problem that employees can't support their family with their earnings, thereby, they have to apply proper welfare benefits to cover the needs of their family. Refer to the study The Hidden Cost of Wal-Mart Jobs by Arindrajit Dube and Ken Jacobs, they estimate how Wal-Mart employees in California do not earn enough salary since Wal-Mart company is the largest retail in the world, it's so wealthy and powerful. They address that "The families of Wal-Mart employees use an estimated 38 percent more in other (non-health care) public assistance programs (such as food stamps, Earned Income Tax Credit, subsidized school lunches, and subsidized housing) than the average for families of all large retail employees."(p.2) Wal-Mart employees are using taxpayers' tax dollars to support their family even though they have jobs and get paid routinely. It seems like Wal-Mart is replacing part of its labor costs onto the public. It indirectly influences the society that citizens have to carry the pressure and the responsibility of paying heavy taxes.

As a result, there're more employees qualified to welfare, taxpayers need to pay more taxes each year. It's a vicious circle of the society and economy. It's all because of Wal-Mart, it doesn't offer reasonable benefits for its employees, such as healthcare plan. Wal-Mart should pay its fair share of the taxes that contribute back to the society, such as public schools and the public highways used to transfer its merchandise across the country. Moreover, the company has to stopped from shifting its burden onto small businesses and individual taxpayers easily because it has the resources and expensive tax advisors.

The majority of the employees are treated with discrimination, especially for female employees in Wal-Mart, it is a serious problem in the company. According to the three elements of discrimination in employment,

"Discrimination in employment must involve three basic elements. First, it is a decision against one or more employees that is not based on individual merit, such as the ability to perform a given job, seniority, or other morally legitimate qualifications. Second, the decision derives solely or in part from racial or sexual prejudice, false stereotypes, or some other kind of morally unjustified attitude against members of the class to which the employee belongs. Third, the decision has a harmful or negative impact on the interests of the employees, perhaps costing them jobs, promotions, or better pay".(The Business Ethic, p.307)

If women and men try to attempt the same position in management, men always acquire the opportunity than women. Hence, Wal-Mart is failed to provide equal employment for women. The shareholders and the C.E.O. of Wal-Mart should not just concern about money and self interest, but also have conscience to the environment and people while doing business. In order to solve the discrimination problem in Wal-Mart, policymaker should put effort to get balance on employment of men and women. Otherwise, it will cost them more money into lawsuit.

According to the article Wal-Mart: Always Low Prices? or Always Discriminates? by Olga E. Vives, an action vice-president of National Organization for Women, she reports that "In management jobs, male trainees earn an average of $23,175 a year, compared with $22,371 for female trainees. Even in top management positions, held mostly by men, the average male senior vice-president earns $419,435 per year, while women earn $279,772 in the same position".(www.now.org) Based on this statistic, by comparing female employees to male employees, women get lower wages and less promotion opportunity. The company acts this unethical practice in order to reduce manufacturing costs and increase its profit.

On the other hand, full-time employees are eligible for benefits. They can buy company stock with a discounted price even though it is 15 percent of the first $1800 in stocks purchased. In fact, "not one in 50 workers has amassed as much as $50,000 through the stock-ownership pension plan. Voting power for these stocks remains with Wal-Mart management".(www.pbs.org) It means that no matter how much stocks are bought by Wal-Mart employees, most of them do not get the power they should have. Moreover, the health insurance plan is overpriced for some employees. The price is double the national average, thereby, not all of the employees can afford the plans that Wal-Mart offers. It shows that Wal-Mart does not consider employees' ability on affording those plans. Wal-Mart has made the huge amount of profit, if it can contribute part of the profit into the health insurance coverage, it helps employees to get their insurance with less costs or even provide them with employer-sponsored health insurance, and it can also reduce complaints from employees and critics from the public.

Based on the above facts and arguments I have found, now I understand that Wal-Mart company does not contribute its sale to the society enough since it's the top retailing company in the world. Its business practice and unfair treatment to its employees leads to the downside on economy and raises lots of problem in the society. Company should not only have foresight on business, but also care about the environment and the society because people are all related to each other. As we're enjoying our shopping in Wal-Mart, we should also consider on the influences that Wal-Mart brings to our lives.

Bibliography:

← Mattera, Philip. Purinton, Anna. "Shopping for Subsidies: How Wal-Mart Uses Taxpayer Money to Finance Its Never-Ending Growth." Good Jobs First. (May 2004)

← Dube, Arindrajit. Jacobs, Ken. "Hidden Cost of Wal-Mart Jobs." (August 2, 2004)

← PBS. STORE WARS: When Wal-Mart Comes To Town. .

← Wal-Mart: Always Low Prices? or Always Discriminates? Nation Organization for Women. .
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